Hard Rock Cafe

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Hard Rock Cafe

founded: 1971

Contact Information:

headquarters: 5401 s. kirkman rd.
orlando, fl 32819 phone: (407)351-6000 url: http://www.hardrock.com

OVERVIEW

Hard Rock Cafe operates and franchises restaurants serving high-quality, moderately priced American-style food and beverages.The Hard Rock Cafe was part of the first wave of popular theme restaurants, focusing on the worldwide fascination with rock 'n roll and its celebrities. The highly charged and informal atmosphere is enhanced by displays of rock memorabilia and a reputation for attracting musicians and other celebrities.

COMPANY FINANCES

Hard Rock Cafes' 1997 sales totalled approximately $400 million. The company is now held by the London-based Rank Organisation, but until 1996 functioned as two distinct corporations—one owned by Rank and one by cofounder Peter Morton. Rank purchased Morton's share for $410 million; however, Morton is still active in the development of new Hard Rock enterprises, including hotels and casinos.

ANALYSTS' OPINIONS

Nation's Restaurant News reported, "The growth of Hard Rock Cafes has slowed, at least in the domestic markets." However, the company's consolidation under Rank management and its expanding interest in hotels and casinos indicate potential for strong growth. Nation's Restaurant News calls Hard Rock Cafe "one of the world's best-known, highest-grossing, and most influential restaurant creations." The magazine's Theresa Howard noted, "Aligning itself with all things cool under the sun, Hard Rock is ensuring that it regains any ground lost during the heady rise of other entertainment-themed restaurants by positioning itself as the premier international entertainment and leisure company."

HISTORY

The idea for the first Hard Rock Cafe came to a pair of expatriate Americans living in London. Peter Morton, whose family ran Morton's Steakhouse, and Isaac Tigrett, a Memphis native, longed for American hamburgers and ice-cold beer. They wanted a restaurant that would offer food everybody could enjoy in a place in which everyone was treated equally. The pair scraped together $10,000 and acquired a loan to open their first Hard Rock Cafe on June 14, 1971. The venue was a former Rolls Royce showroom in London's Mayfair District. Items on the menu were inspired by Tennessee truck stop fare: burgers, fries, shakes, and apple pies. The restaurant's theme was inspired by a love of American popular music.

From its very beginning the Hard Rock Cafe was dedicated to rock 'n roll and everything associated with it. The restaurant name itself was inspired by the art on an album cover: According to corporate mythology, Tigrett was studying the small print on the back sleeve of The Doors' 1970 album Morrison Hotel when he noticed the picture of a make-believe cocktailbar called the Hard Rock Cafe.

The restaurants are perhaps most famous for their decor, which is covered with anything and everything related to rock music and the musicians who play it. The chain's first item of memorabilia was a guitar donated by Eric Clapton. Not to be outdone, Pete Townshend sent his guitar along with a note stating, "Mine's as good as his!" The collection grew to more than 35,000 items by 1997. The pieces are circulated periodically from restaurant to restaurant worldwide. The company boasts that it owns some of the most priceless rock 'n roll artifacts on display anywhere in the world.

The first Hard Rock Cafe, in London, has also been a popular spot for the superstars of rock to perform and celebrate. Paul McCartney, Prince, Janet Jackson, Sting, Elton John, George Harrison, and Peter Gabriel are among the stars who have performed there. These events have included informal jam sessions, such as the 1995 performance by Sting and Elton John. Bob Geldof, a British musician known for his Live-Aid efforts and his band the Boomtown Rats, celebrated at the London Hard Rock following his honorary knighthood.

Morton and Tigrett had their differences, however, and by 1979 they went their separate ways. Morton opened his exclusive Morton's restaurant in Hollywood; three years later he sold his share in the London Hard Rock Cafe for $800,000, and proceeded to open the first Hard Rock Cafe in the United States, which met with opposition from Tigrett.

According to Nation's Restaurant News, a legal squabble between the former partners over Morton's disputed rights to Hard Rock ultimately was won by Morton on intellectual-property grounds. The two factions divided up the world for future expansion and split the United States along the Mississippi River. A jointly owned licensing company was set up to control the shared trademark.

Tigrett took his Hard Rock faction (Hard Rock International) public in England in 1983, selling 25 percent of the company for $1 million. He launched the New York Hard Rock a year later. In 1987 his company sold notes representing 23 percent of its equity for $54 million. In 1988, with a total of seven Tigrett-run Hard Rocks operating internationally, he sold the 54 percent he controlled for $108 million, personally pocketing some $30 million. With that money, he opened the first House of Blues in 1992.

Rank Organisation, which purchased Tigrett's interest in the Hard Rock restaurants in 1988, was also able to acquire Morton's share in 1996, shortly before the twenty-fifth anniversary of the cafe chain. The London-based Rank paid $410 million for Morton's Hard Rock Cafes, and with them acquired worldwide control of the Hard Rock brand. The consolidation of the brand under one company would allow expansion and aggressive marketing of the chain. CEO and president James Berk stated in International Business, "Unification of the Hard Rock trademark provides an unprecedented opportunity to take an internationally recognized and respected brand and exploit it more fully."

The chain continued to expand under Rank's management. It comprised approximately 80 restaurants in 1998, and planned to open a new restaurant every month until the end of the millenium. The company is also expanding its focus by sponsoring rock tours, co-producing record albums, and forming partnerships with music video cable channel VH1.

FAST FACTS: About Hard Rock Cafe

Ownership: Hard Rock Cafe is a privately held company.

Officers: James Berk, Pres. & CEO

Employees: 1,500

Principal Subsidiary Companies: Rank Organisation PLC purchased half of Hard Rock Cafe in 1988 and half in 1996.

Chief Competitors: Hard Rock Cafe's competitors include: Planet Hollywood and Official All-Star Cafes.

STRATEGY

The company's mottoes embody the Hard Rock philosophies: "Love All—Serve All," "Take Time To Be Kind," "All is One," and "Save the Planet." The focus of the original restaurant was on treating all customers equally well, a strategy that has paid off worldwide. The company's anti-elitist—and ostensibly American—stand has made people around the world feel comfortable and welcome in the Hard Rocks, and customers have responded by buying the chain's hamburgers, beers, T-shirts, and pins. Hard Rock Cafe has always placed importance on environmental and humanitarian issues, pursued with a definite sense of "coolness." This emphasis has contributed to the chain's popularity with customers, some of whom could be called "followers," so devoted are they to the restaurants. Hard Rock Cafes around the globe still adhere to the original vision of its founders, which was to provide customers with a complete rock experience.

INFLUENCES

The Hard Rock Cafe and its phenomenal success has inspired many similar ventures, from Dick Clark's American Bandstand Grill to Elvis Presley's Memphis. As the popularity of themed restaurants grows, the competition for customers increases. The toughest competition Hard Rock Cafe faces is from Planet Hollywood, an international movie-memorabilia restaurant chain.

Morton brought a lawsuit against Planet Hollywood in the early 1990s. He explained in a 1994 Restaurants & Institutions interview what provoked his action: "Well, to cut through it, we allege that Planet Hollywood mis-appropriated our trade secrets and know-how and breached fiduciary duties, and this was all while Robert Earl was the CEO of the Rank Hard Rocks and at the same exact time, CEO of Planet Hollywood. He was CEO of both organizations at the same time. I think the right place for the litigation is in the courts, and that's where we are." Morton eventually settled the dispute out of court, but Planet Hollywood remains a strong competitor for the Hard Rock chain.

CURRENT TRENDS

To set Hard Rock Cafe apart from its competitors, management is turning increasingly to the rock 'n roll roots of the organization. In 1977 Hard Rock teamed up with Rhino Records to form Hard Rock Records. The label produces rock 'n roll compilations celebrating the last 25 years of popular music. The company is considering expansion in the area of concert venues, and continues to strengthen a long-time commitment to live music by sponsoring tours of Cafe sites, including a Jonny Lang tour in 1997. Hard Rock Cafe is also sponsoring a weekly show on VH1 that highlights live performances. In addition to the new ventures, Hard Rock Cafe continues to sell its signature T-shirts, pins, and leather jackets.

The link with rock 'n roll is what sets the Hard Rock apart from other "eater-tainment" institutions. Regarding competition with other themed restaurants, founder Morton told Restaurants & Institutions, "We've always had competitors out there, and their theming is in a certain way like a Halloween party. They put on a costume. I don't think we put on costumes at the Hard Rock. I think there's a real love for what the Hard Rock has put out there in its association with the rock-music entertainment industry."

Hard Rock's focus in the past has been on tourists, but the company now aims to be a destination for home-town diners as well. While Hard Rocks continue to be welcome oases for Americans abroad, and wildly popular stops for international (and American) tourists in the United States, a current goal for the chain is to offer such quality food, service, and entertainment that people desire to return to the Hard Rock in their city again and again.

PRODUCTS

In 1998 approximately 80 Hard Rock Cafes operated in more than 30 countries. The company hopes to have more than 100 restaurants in operation by the end of the century. Each location offers logo-emblazoned merchandise, Hard Rock records, and live music events, in addition to food and drink. Peter Morton also operates a Hard Rock hotel and casino in Las Vegas, Nevada. Further development in gaming and lodging may be in the company's future.

CHRONOLOGY: Key Dates for Hard Rock Cafe

1971:: Founded on June 14
1973:: Paul McCartney plays at Hard Rock in London
1977:: Forms Hard Rock Records
1983:: Hard Rock offers stock publicly in England
1985:: Participates in Live Aid
1988:: Tigrett sells his 54 percent
1990:: Launches Signature Series of charity
1991:: Veggie burger is introduced
1996:: Rank Organization, PLC purchases Hard Rock America

CORPORATE CITIZENSHIP

Good global citizenship was one of the cornerstones on which the Hard Rock Cafe was founded, and the company continues to support a wide range of charitable efforts. Environmentalists, AIDS organizations, famine victims, and the homeless are only some of the groups that have benefited from the Hard Rock's social conscience. Specific charities that have enjoyed long relationships with the Hard Rock include Friends of the Earth, PETA (People for the Ethical Treatment of Animals), and the Elton John AIDS Foundation. The company's strong links with the music business fueled its relationship with the Nordoff Robbins Music Therapy Centre, a United Kingdom- and New York-based charity that reaches out to autistic children through the power of music.

Hard Rock Cafe has catered famous charitable rock events by setting up backstage restaurants, and has been a sponsor of such charity rock events as Live Aid, The Wall Concert, The Nelson Mandela Tribute, and tribute events for rock greats Bob Dylan, John Lennon, and Freddie Mercury.

Another humanitarian effort of the Hard Rock is the Signature Series, a special line of T-shirts designed and signed by rock stars and printed in limited editions. Profits from sales of these shirts benefit each artist's charity of choice. More than $4.5 million had been raised by the program by 1996. Participants have included Sting, Elton John, Aerosmith, REM's Michael Stipe, the Grateful Dead, and John Lennon.

In addition to its substantial monetary donations, Hard Rock has increased public awareness of such issues as AIDS, homelessness, environmental abuse, and education through music." To continue these social and environmental good works, the company maintains a corporate foundation that oversees contributions and does the administrative work involved in philanthropy.

GLOBAL PRESENCE

Hard Rock Cafes are located throughout North America, Europe, and Asia, as well as in South America, Africa, the Middle East, and Australia. The global thirst for all things American continues to drive the expansion of the chain, offering as it does a glimpse of hip American rock culture. As the planet shrinks through communications and American culture and music permeate world culture, the chain's global possibilities appear limitless.

HARD ROCK PLAYS SOFTLY ON THE PLANET

Of all the prescription drugs in the United States, at least one quarter contain active ingredients derived from plants, the majority of which come from tropical rain forests. Although rain forests account for less than 6 percent of the world's land mass, they are unarguably the world's most biologically diverse habitats. The Hard Rock Cafe, in association with Conservation International, strives to protect the valuable rain forests by purchasing sustainable harvested Brazil nuts for dessert toppings. The Hard Rock's slogan "Save the Planet" is a symbol of the Cafe's commitment to saving the environment while simultaneously providing customers with dessert toppings that are easily replenished. By providing an economic incentive for Brazilians to conserve the trees and plants that provide products such as chocolate, coffee, and nuts, the Hard Rock Cafe is actively working against rain forest destruction. Eat at Hard Rock and "Save the Planet."

EMPLOYMENT

Everyone involved in the Hard Rock Cafe has a dedication to the goals expressed in the restaurants' mottoes, and especially to the world of rock 'n roll. Many young members of local waitstaffs are involved in music, whether it be collecting CDs or playing in a garage band. Occasionally, the son, daughter, brother, or niece of a rockstar or popular figure is hired as a waiter, waitress, or even a manager.

SOURCES OF INFORMATION

Bibliography

bartlett, michael. "peter morton: the hard rock cafe co-founder talks about saving the planet, the myth of the all-wise ceo and why gambling is the defense industry of the '90s." restaurants & institutions, 15 november 1994.

davis, g. alisha. "striking gold in its silver year." international business, july/august 1996.

howard, theresa. "hard rock broadens scope, keeps finger on pulse of cool." nation's restaurants news, 30 june 1997.

kochak, jacque. "that's eater-tainment!" restaurants business, 15 february 1998.

martin, richard. "peter morton & isaac tigrett." nation's restaurant news, february 1996.

"morton sells his piece of the 'rock' to rank." nation's restaurant news, 17 june 1996.

soeder, john, "hard rock cafe reunited." restaurants hospitality, july 1996.